Alfa-Bank Ukraine’s additional capitalization by $1 billion at the expense of shareholders who fell under European sanctions is proposed to be carried out in the form of a “perpetual subord” (subordinated loan), Roman, head of the bank’s supervisory board, said.
“There was no ‘perpetual subord’ instrument in the country. This money is in the form of an eternal debt that is never repaid, interest can be paid on it, but this is a subord that goes into Tier 1 capital,” he said in an interview with Interfax- Ukraine”.
“There is no other tool. Firstly, war, and secondly, because of sanctions, we cannot enter the markets,” Shpek said.
The head of the Supervisory Board found it difficult to predict in what terms the necessary permission from European regulators could be obtained in practice and additional capitalization could be carried out in practice.
“Because this is the first time this path has been taken, no one knows how long it will take,” he explained.
According to Shpek, if this happens in half a year, then it will be “normal”, while such terms as a year are not considered.
He clarified that at present the bank’s appeal with the necessary confirmations from Mikhail Fridman and Petr Aven is in the working body in the legal directorate of the Council of Ministers of the European Union, which deals with sanctions issues.
“Now we plan to hold working meetings at the end of this month or the beginning of the next, when they are ready to talk to us, in those authorized bodies of the Council of the European Union,” added the head of the Supervisory Board.
He clarified that since the funds are in the accounts of a British bank, but in a branch in the EU, the decision to lift sanctions for $ 1 billion for additional capitalization of the bank is made in the EU.
“If it were in the UK or the United States of America, the procedure would be simpler. Since in the EU, decisions must be made by representatives of all member countries. In addition, the US has a precedent for adjusting sanctions, while the EU does not,” Shpek said.
The bank is currently operationally profitable and has sufficient liquidity, he said, and its losses are caused by the need to create reserves for loans, the quality of which has deteriorated due to Russian aggression.
Speaking about the alternative of finding an investor, the head of the Supervisory Board stressed that he does not see anyone who is ready to come to Ukraine during the hostilities. “There are no volunteers! Banks today are reducing their portfolios, working through restructuring in order to support the client, and there are not so many new projects. How to evaluate and accept risks?” he explained.
At the same time, according to Shpek, there are constant conversations with those who are interested in working on the Ukrainian financial market in order to resume such attempts when the situation improves.
Alfa-Bank Ukraine, according to the NBU, as of July 1, 2022, ranked 7th (UAH 112.67 billion) in terms of total assets among 68 banks operating in the country. Its net loss in January-July 2022 amounted to UAH 3.52 billion. The financial result of the bank was affected by deductions to reserves at the level of UAH 8.357 billion.
According to the financial institution, its largest shareholders are currently indirectly Andrey Kosogov (40.9614%, after the war the packages of German Khan and Alexei Kuzmichev, which fell under the sanctions), Mikhail Fridman (32.86%) and Petr Aven (12. 4018%), as well as UniCredit S.p.A. (Italy, 9.9%) and the Mark Foundation for Cancer Research (3.8736%). The Bulgarian ex-minister of finance, executive director of the Financial Markets Group of the London School of Economics and technical adviser to the European Commission Simeon Dyankov, in agreement with the NBU, is the trustee of the National Bank for the packages of Kosogov, Fridman and Aven, who also fell under sanctions.
In early June, Dyankov reported on the bank’s efforts to obtain regulatory approval to recapitalize with $1 billion in subordinated debt from sanctioned funds from a number of its shareholders. Speck specified that the amount of $1 billion is caused both by the possible need for $500-600 million to comply with the capital adequacy ratio in 2023, and by the desire to have a resource to increase lending.
David Arakhamia, the leader of the ruling Servant of the People faction, said in an interview with Forbes Ukraine last week that Alfa-Bank Ukraine needs additional capitalization by $1 billion, and if the asset is nationalized, then this amount will have to be paid to the state.
The National Bank of Ukraine has agreed on amendments to the charter of Alfa-Bank Ukraine on renaming it to Sens Bank, Roman Shpek, head of the supervisory board of the commercial bank, said.
“The message just came that the National Bank agreed on changes to the charter. But there is still more work to be done, other documents to be prepared,” he said in an interview with Interfax-Ukraine.
Shpek specified that it is planned to complete the renaming process in December this year.
“Believe me, it is morally and psychologically important for us, the team, not to be associated with the Russian Alfa-Bank. This is the main reason for changing the name at this time,” he stressed.
According to the head of the Supervisory Board, he expects that the bank’s customers will also react positively to its renaming.
Commenting on the decrease in the bank’s assets, Shpek called it rather a positive sign, indicating a high level of control and management of the loan portfolio. The service level for corporate loans is 85%, he added.
“Of course, there were panic moods in the first months of the war, including because of the news about the sanctioning of the final beneficiaries or against the background of fakes that have been constantly trying to spread about us lately. But the situation is leveling off. In August, we recorded an increase in funds for urgent deposits,” the head of the Supervisory Board said.
He added that next year, based on the overall macroeconomic situation, the bank’s financial condition is unlikely to improve significantly, but the bank clearly sees how to maintain operating profitability.
As previously noted in an interview with Interfax-Ukraine, ex-Minister of Finance of Bulgaria Simeon Dyankov, who in mid-April, in agreement with the National Bank, was given the right to vote in the majority stake in Alfa-Bank Ukraine, the board of the financial institution decided to abandon the Alfa brand and continue work under a new brand. The shareholders’ meeting approved the renaming on 12 August.
“When the board was deciding on a new brand, the decision became obvious. For the last two years, our priority has been the development of the Sense SuperApp digital bank,” Alla Komisarenko, head of the bank’s board, explained the choice of a new brand.
Alfa-Bank Ukraine, according to the NBU, as of July 1, 2022, ranked 7th (UAH 112.67 billion) in terms of total assets among 68 banks operating in the country. Its net loss in January-July 2022 amounted to UAH 3.52 billion. The financial result of the bank was affected by deductions to reserves at the level of UAH 8.357 billion.
The aviation industry enterprise FED JSC (Kharkiv) in January-June 2022 received a net income of UAH 228.18 million, which is 2.7 times less than in the same period of 2021.
According to the interim financial statements of the enterprise, published in the information disclosure system of the National Commission for Securities and Stock Market (NCSM), its net profit in the first half of the year decreased by almost 9 times – to UAH 19.84 million.
FED received UAH 26.48 million of net profit from operating activities against UAH 223.3 million a year earlier, while gross profit decreased 3.4 times, to UAH 88.36 million.
The report notes that the suspension of the company’s activities during the war period affected the financial statements, resulting in, in particular, a decrease in revenues. At the same time, the report does not indicate the period for which the work was suspended.
According to the company’s previously published statements for the first quarter of this year, its net income for this period decreased by 40% – to UAH 170.35 million, and net profit by 39% – to UAH 40.12 million.
Thus, in the second quarter of this year, the FED received a loss of UAH 20.28 million against a net profit of UAH 110.19 in April-June 2021, and net income decreased by 5.8 times to UAH 57.83 million.
JSC “FED” is one of the leading enterprises in Ukraine, specializes in the development, production, maintenance and repair of units for aviation, space and general engineering purposes. Export geography includes EU countries, China, South Korea, India, UAE.
In 2021, according to preliminary data, the company increased its net profit by 55% by 2020 – up to UAH 395.37 million, net income has not yet been made public.
By the beginning of 2021, the company employed more than 940 people.
More than 98% of the shares of JSC “FED”, according to the National Securities and Stock Market, belongs to the head of the board Viktor Popov.
INGO Insurance Company provided 17% more medical services in August than in July, according to the website of the insurer.
It is also noted that the intensity of seeking medical care in August increased to 1.3 thousand per day.
In August, the company paid the insured UAH 25 million for all these services and medicines against UAH 17.8 million in July. Most of all, the IC paid for medical consultations (+21%), medicines (+22%), and instrumental diagnostics (+23). At the same time, dental care and payments for ophthalmology decreased by 3% and 8%, respectively. In addition, payments for hospitalization services (+13%) and fortification (+68%) increased.
“INGO” is a full member of the Motor (Transport) Insurance Bureau of Ukraine (MTIBU), a member of the American Chamber of Commerce (ACC), the European Business Association (EBA) and the International Chamber of Commerce (ICC).
Passenger flow through the western border of Ukraine in June 2022, thousand (graphically)
Data: State Border Service
The Joint Coordinating Center (JCC) has authorized the movement of more than 400 vessels during its work within the framework of the Black Sea Grain Initiative, the UN reported.
“As of September 23, the total tonnage of grain and other agricultural products exported from three Ukrainian ports is 4,556,311 tons. In total, 420 ships have been allowed to move at the moment – 217 for arrival in Ukrainian ports and 203 for leaving them,” – the message says.
It is noted that on September 23, 12 ships with more than 200 thousand tons of food left Ukrainian ports after receiving permission from the SKC.
The UN explained that five ships – Zeko Y (8.2 thousand tons of wheat), Olma (5150 tons of soybeans), Merry M (4450 tons of sunflower meal), Gudena (3860 tons of sunflower oil), Nil Demir (3, 7 thousand tons of peas) – went to Turkey.
In addition, the Sea Dove (33 thousand tons of corn) and Lady Ayana (27 thousand tons of corn) ships sailed for Italy, the Fortuna dry cargo ship (10,252 tons of sunflower meal) – for France, the Gem Star ship (31,039 tons of corn) – to the Netherlands.
Dry cargo ship Mo Gan Shan (57,311 tons of wheat) was poisoned in Bangladesh, the ship Mavka (11,950 tons of sunflower oil) – in Romania, Tzarevich (10 thousand tons of sunflower meal) – in Bulgaria.
On July 22, in Istanbul, with the participation of the UN, Ukraine, Turkey and Russia, a document was signed on the creation of a corridor for the export of grain from three Ukrainian ports – Chornomorsk, Odessa and Pivdenny.
